Workshop background paper, “Framing a Future Chemicals Policy”, Boston, April, 28-29, 2005
•
The views expressed in these background papers are the views of the individual
concerned, and do not necessarily reflect the views of their employers.
•
These papers are intended as a thought starter, asking key questions; they are not a
comprehensive review of the issue.
6. Integrating improved chemicals management into business
processes, including product design
Tom Swarr, United Technology Corp.
Business is under intense competitive pressure to continuously innovate their product
offerings. New product development is a critical leverage point for integrating
precautionary chemical management concerns into business decision-making. The
process is capable of handling the technical elements of a forward-looking assessment of
chemical use across the full product system life cycle. The challenge is to identify
emerging problems early in the development cycle, before a company has committed
significant resources that create barriers to substitution.
Problem Statement
Chemicals have become ubiquitous in modern society, providing numerous benefits and
conveniences but also contributing to a growing concern about toxic impacts on humans and
ecosystems. Few of the chemicals being marketed have been characterized for their potential
harmful effects. The current problem- focused regulatory approach starts with observed effects,
and requires sufficient scientific evidence be accumulated to show the source activity imposes an
unacceptable risk. Establishing these links in a legalistic and confrontational system is difficult.
There are delays between discharge and exposure and between exposure and effects that make it
very difficult to conclusively establish cause and effect. There is growing demand for a forward-
Problem Focus
Solution Focus
Economic
activity
Discharge
Exposure
Delay
Absorbed
dose
Effects
Delay
Figure 1 - Causal Links Between Activity and Effects
looking solutions approach that places the burden on the advocate of the proposed activity to
demonstrate an acceptable level of safety. The situation is shown schematically in Figure 1.
A solution focus looks beyond simply obeying regulatory limits on allowable discharge rates. A
precautionary approach argues that companies should look forward in time across the full product
life cycle, including the network of suppliers and complementary services that support the
Workshop background paper, “Framing a Future Chemicals Policy”, Boston, April, 28-29, 2005, p1
product offering, to consider how chemicals- as actually used by suppliers, manufacturing
personnel, service technicians, etc. - could cause harmful effects to humans and ecosystems. It is
countered that the precautionary approach would block innovation and is simply not
economically practical in today’s global market.
The objective is to integrate chemical safety considerations into routine business decisions. The
current approach starts with the effect and attempts to trace causal links back to the source
activity, which is already challenge when considering acute effects triggered by point sources.
When considering chronic effects resulting from the cumulative impacts of numerous diffuse
sources (such as consumer products) it is virtually impossible. The rapid cycle of new product
offerings will overwhelm any backward looking approach. Building precaution into product
development practices is a critical success factor. The first section of this paper will provide an
overview of a generic product development process and identify key decisions that gradually
lock- in specific technologies, materials, and risks. The second part will address the arguments
regarding innovation and economic practicality.
Dare to be naïve. – Buckminster Fuller
Generic Product Development Process
New product development is a business decision- making process. It is supported by technical
activities, such as research and development or design and analysis, and can be described as the
evolution of information punctuated by decisions (Ullman, 2001). Decisions commit resources,
financial and human, to drive actions, which ultimately produce the positive benefits intended
and the unanticipated negative consequences that trigger regulatory actions. A generic stage- gate
new product development process shown in Figure 2 is representative for many companies,
although the specific names and number of stages may vary (Cooper, 2001). A stage has a
defined set of tasks that generate information, typically in the form of deliverables such as
drawings, reports, etc. needed to support key business decisions. A gate is an executive level
review, which decides to continue investment in the project or terminate and divert limited
resources to more promising projects. It is also the responsibility of management to assure that
required tasks in each stage have been adequately completed to support a quality decision.
Company Goals & Policies
Planning
G
Conceptual
Design
G
Detailed
Design
G
Testing /
Prototype
G
Production /
Launch
G
Product
Review
G
Supporting Activities
Figure 2 - Stage - Gate Product Development Process
Company goals and policies define the criteria used to make the gate go- no go decisions. These
are constrained by the competitive position of the company, but will include non- financial
objectives.
The initial planning stage surveys external pressures, public expectations, customer needs, and
industry trends to define the requirements for a successful product offering. What will it take to
Workshop background paper, “Framing a Future Chemicals Policy”, Boston, April, 28-29, 2005, p2
excite the customer? What is the potential market and profitability? These questions determine
the boundaries of the business opportunity and definition of the appropriate system boundaries
for environmental evaluations.
During conceptual design, the team assesses the strategic fit of the identified business opportunity
with company capabilities and objectives to assure resources are focused on the most attractive
projects. Is the company excited by this opportunity? Preliminary analyses are used to assure the
feasibility of a fully developed conceptual plan that satisfies the customer need consistent with
the strategy and capabilities of the company.
Detailed design activities develop complete bill-of-material, drawings, manufacturing plans, etc.
that meets technical specifications and enables design of the manufacturing and support processes
consistent with project cost and quality goals. Can we do it? The concept is translated to
hardware and business systems needed to deliver the proposed customer benefits. Detailed plans
demonstrate project goals will be met, at least ‘on paper.’
Activities during the next stage demonstrate the feasibility of the product offering by testing
prototypes or by analysis and simulation. Prescribed tasks confirm the producibility of the design
and verify projected manufacturing costs. Can we deliver a winning solution? The go/ no go
decisions are critical, because project costs escalate dramatically in subsequent stages.
Market launch introduces the product to selected markets to validate manufacturing processes at
production levels. Plans are in place to ramp up volume to meet customer demand at required
levels of quality. Support systems are in put place, and product performance in the customer
environment is monitored to catch any surprises. If all systems perform as expected, the project is
approved for full deployment as a proven product offering. The design team works with the
product management function to provide technical and logistic support to maintain the offering at
warranted levels of performance. Did we deliver what we promised? After a fixed period in
service that will vary with product category and expected lifetime, a formal product review is
held to assure lessons learned from the project are captured and used to improve subsequent
projects.
The stage- gate process can be adapted to the complexity of the project. A clean sheet design of a
new global platform is a high-risk project with potentially larger payoffs. These projects would
be subject to rigorous analysis requiring completion of all activities and subject to gate review by
top management. Derivative designs or regional products would face lower risks, but with lower
potential gains. Project leaders would have the option to simplify the development process,
skipping certain tasks, and the appropriate level of management would conduct gate reviews.
Simple engineering changes to correct product design deficiencies or make minor enhancements
are constrained projects with limited risk. The primary objective is to assure proper control to
enforce design standards and avoid any new problems. These projects would skip many of the
activities and lower level management would conduct the gate reviews.
Precautionary Chemical Management
A precautionary approach comprises preventative action in the face of uncertainty, shifting the
burden of proof to producers, and a more robust process to generate and evaluate safer
alternatives (Tickner & Geiser, 2004). The implications of a precautionary approach can be
assessed on the stage- gate decisions.
Workshop background paper, “Framing a Future Chemicals Policy”, Boston, April, 28-29, 2005, p3
Planning stage activities scan the external environment for unmet needs, market responses of
competing companies, shifting social attitudes, technology development, and virtually any
developing trend that can affect the future of the company. Research has shown there were early
warning signals on asbestos, CFC’s, and other toxic chemicals. The early warnings were ignored
or resisted (European Environment Agency, 2001). Planning stage scanning activities can be
expanded to consider the full product life cycle and to be more sensitive to lay knowledge that
may be poorly articulated but no less valuable in identifying negative effects of chemicals. Early
and comprehensive identification of the requirements for a product offering should yield
improved designs that better satisfy customer needs, while also allowing timely development of
substitutes. Expanding the scanning boundaries should stimulate innovation and alternatives
assessment by promoting an enhanced appreciation of the larger product system.
Conceptual design activities assess the fit of the proposed business opportunity with company
capabilities. Each company has developed a portfolio of technologies, manufacturing processes,
supply networks, distribution channels, etc. to establish a competitive advantage in its defined
market space. There is limited definition of the product design at this stage, but there is
considerable information to determine likely material issues ‘if we build this product the way we
built the last one.’ Shifting to safer alternatives could require new technologies, qualifying new
suppliers, retraining manufacturing personnel, etc. Building in a more complete understanding of
the human implications of safe chemical use is a necessary element for a precautionary approach.
Early consideration of alternatives enables proper assessment of technical readiness to assure
substitutes are available to meet the project schedule.
The gate review of detailed design activities freezes the design to support development of all
production and support decisions. Specific materials and suppliers are identified enabling a
comprehensive assessment of all potentially problematic materials in the fielded product. Capital
appropriations are approved for modification or upgrade of manufacturing processes, product
distribution, and aftermarket support systems. Risk management plans are in place to monitor
deployment of alternatives to assure product functionality is not impacted. It is not sufficient to
assess releases strictly in terms of regulatory limits. What is the physical form of the chemical
and how will this affect the dispersal/ transport of the released material? What are reasonable user
scenarios that can help determine potential exposures? What monitoring would provide early
detection of unanticipated effects? This is a critical stage to avoid investments that lock in
material choices that carry unnecessary liabilities or risks.
Validation with prototypes or quality tests is a final opportunity to verify all assumptions and
analyses, before committing major investments for production. It is particularly important to
verify the human factors involved in safe chemical use. Do people behave as expected? Are user
exposure scenarios reasonable? Do protective measures and equipment work as expected and
achieve the desired levels of protection? Are there any unanticipated counter effects caused by
substitutes that may negate the environmental and safety benefits? Once a decision has been
made to go to full production, there are significant investments at stake that will create barriers to
future change. During this stage, the producer must also verify compliance of all suppliers with
material restrictions and establish procedures to identify and confirm material content of all
procured parts.
During market launch and product review, the company is essentially committed to specific
technologies and materials. The challenge is to monitor field experience to quickly identify any
surprises. Early detection and correction of any problems that impact customers or end- users is
Workshop background paper, “Framing a Future Chemicals Policy”, Boston, April, 28-29, 2005, p4
necessary to protect the reputation of the company. This is a challenging task; the profitability of
the project will be severely impacted by a redesign to eliminate a defect. The cost of replacing
materials can be significantly increased when the parts must be recertified to various safety
codes. Conversely, early identification of deficiencies with existing products can be a valuable
source of new product concepts.
Practical Barriers to Precaution
Economics and public access to information are two critical elements of success, and two
significant barriers to implementation of a precautionary approach. Given a choice between a
product that poisons its users and one that is inherently safe to use, few companies would
consciously set out to design a toxic product. Why then have early warning of toxic products
been ignored? It may be that a corporate manager’s fiduciary responsibility to protect the assets
entrusted to him by the investors is inherently in conflict with the precautionary approach
outlined. A company can be sustainable only if it generates sufficient returns to attract capital
investment monies. If the company is overly cautious compared to its competitors, the rate of
return will suffer. Investors will shift their money to the better performing companies. Companies
that identify potential hazards and safer alternatives may be held liable for imposing unnecessary
risks on the public, while the companies that hide potential risks escape accountability. A
rigorous alternatives assessment process challenges a company to openly question all committed
resources to develop and evaluate inherently safer ways of providing similar value to its
customers. The same customers that want inherently safe products also want double-digit returns
on their pension funds.
The highly interconnected nature of the global economy also works against the precautionary
approach. It can be difficult if not impossible top predict ripple effects of any decision to move to
safer alternatives. Each material system has various byproducts and wastes that can cause
problems. If markets move away from a specific feedstock, there will be economic pressure top
create new uses. Competitors will try to innovate to win back lost markets. Selection of a
particular material or technology creates pressure for complementary products and services.
Individual companies makes hundreds of separate but interrelated decisions that are eventually
judged based on the cumulative effects of all those decisions. The speed of innovation can easily
overwhelm a precautionary approach.
Public engagement in the identification and evaluation of to alternatives is critical to acceptance
of recommended actions. Companies fear loss of business sensitive information or public
backlash against open communication of risks and hazards. New product investments determine
the future success of the company. Open disclosure of product concepts to help identify potential
hazards can also alert competitors to planned strategic moves. Managers have a responsibility to
protect company information and a civic duty to openly discuss safer alternatives that are in
conflict. Rather than asking managers to make moral stands that jeopardize their economic
security, we should ask what institutional changes are necessary to align fiduciary responsibilities
to protect invested assets with a precautionary approach to chemical management?
Workshop background paper, “Framing a Future Chemicals Policy”, Boston, April, 28-29, 2005, p5
Questions
•
Development of new technologies and regulation of any unwanted effects of those
technologies are treated as two distinct processes. How can we open technology
planning to public dialogues without compromising business sensitive information?
•
Early warning signals of previous chemical problems were ignored. How can we
better capture the lay knowledge of these early detection signals? Can we create a
system that rewards open communication of potential problems?
•
All technical advances contain risks. Technology has provided significant benefits.
Our success in eliminating many acute hazards has exposed more subtle and chronic
effects. People die from cancer, because they are less likely to die from childhood
and communicable diseases. Can we differentiate between risks imposed by careless
or illegal activities and the residual risks that escape honest and thoughtful risk
mitigation practices?
•
Companies make product development decisions based on their assessment of the
available data and likely responses of competitors. The economy is highly
networked, and the ultimate impacts are the collective outcome of the actions of
numerous companies. How do we measure and promote effective action of individual
companies in a world shaped by collective outcomes?
References
Cooper, R. G. (2001). Winning at new products: Accelerating the process from idea to launch.
Cambridge, MA: Perseus Publishing.
European Environment Agency. (2001). Late lessons from early warnings: The precautionary
principle 1896-2000. Environmental issue report No. 22. Luxemborg: Office for Official
Publications of the European Communities.
Tickner, J. A., & Geiser, K. (2004). The precautionary principle stimulus for solutions- and
alternatves- based environmental policy. Environmental Impact Assessment Review, 24, 810-824.
Ullman, D. G. (2001). Robust decision- making for engineering design. Journal of Engineering
Design, 12(1), 3-13.
Workshop background paper, “Framing a Future Chemicals Policy”, Boston, April, 28-29, 2005, p6